British banking institution Standard Chartered is set to become the latest company to provide support for institutional crypto industry players. The bank announced that its innovation arm, SC Ventures, had partnered with U.S.-based investment management firm National Trust to launch custody services for institutional crypto investors.
Set for a 2021 Launch
The custody service, known as “Zodia,” will be based in London, making it subject to the Financial Conduct Authority (FCA) regulations. Standard Chartered explained that it would begin operations next year. The bank added that it had registered the platform with the agency and looked to get approval.
Initially, Zodia will only support Bitcoin, Ether, XRP, Bitcoin Cash, and Litecoin. It is unclear whether support will come for other assets in due time.
Speaking on the development, Alex Manson, an executive at SC Ventures, explained that it represents the bank’s commitment to “rewiring the DNA in banking.” He added that the platform will draw on Standard Chartered’s 160-plus years of experience in providing custody services for institutional clients and will improve industry standards for the digital asset space safely and sustainably.
Perfect Time to Evolve
Standard Chartered appears to be embracing the growing digital asset space in the United Kingdom – something that Bank of England (BoE) Deputy Governor John Cunliffe has counseled. Speaking last week, Cunliffe explained that digital assets and blockchain technology allow citizens to store their assets, essentially threatening banks’ solutions.
The BoE Deputy Governor added that banks would need to remain relevant. However, that task falls to them, not the regulator.
“Our job is not to protect bank business models. Banks will have to adjust. Our job is to ensure that if bank business models change, we manage the financial and macro-economic consequences of that,” he said, per a Reuters report.
Cunliffe added that several aspects of the crypto space pose threats to banks’ standing. If it’s not traditional assets, it is the looming possibility of Central bank Digital Currencies (CBDCs). Banks are now at risk of being cut out and losing their position as intermediaries between citizens and their money. While they will still function as on-ramps for fiat currencies, their role will diminish.
The bank is also making this move at a reasonable time as institutional interest in Bitcoin is increasing. The traditional economy has taken significant hits this year, thanks in no small part to the coronavirus pandemic. Investors have all but lost faith in fiat, and many are moving to crypto.
2020 already saw the entry of players like MicroStrategy and more. There is a possibility that British institutions will do the same into the new year, and Standard Chartered could put itself in the right position to serve them. As Manson said, the bank already has a strong pedigree that precedes it.